Keystone Distribution ensures quality comes as standard at McDonald’s
As a major McDonald's supplier it is Keystone Distribution’s responsibility to set exacting standards and provide leadership in helping improve the value for money that McDonald's is able to offer to its customers
Written by James Hurley & Produced by Kiron Chavda
Keystone Distribution was established in 1977 in partnership with McDonald's as its UK baker of hamburger buns, and the company has been growing with McDonald’s ever since. Efficiently supplying all McDonald's restaurants with everything they need to operate, the company employs over 1000 people in its sites in Hemel Hampstead, Heywood and Basingstoke and guarantees the supply of fresh food daily, 24 hours a day, seven days a week to McDonald’s restaurants up and down the country.
A symbiotic relationship
Ramsay Assal, Keystone Distribution’s Logistics Director, emphasises the company’s close ties with McDonald’s, in everything from financial policy to marketing and business intelligence. “Our general growth is linked to McDonalds,” he says. “As a company we work only and exclusively for McDonald’s. Our whole operational development is intrinsically linked to theirs – they go up, we go up, it’s as simple as that. Everything that they buy in terms of consumables – that’s all paper and chemicals, as well as frozen and chilled foods and toys – everything is bought from us. Since we don’t deal with anybody else, there’s no need for marketing and development as we’re exclusive suppliers. In essence, we have a very close and intrinsic relationship with them.”
One consequence of this close relationship is that Keystone feels the sting of unfair media criticism almost as keenly as McDonald’s does, and Assal says that the company is in the perfect position to know just how unreasonable some of the disparagement is. “Being the biggest and most successful fast food outlet in the world, McDonald’s is an easy target. It seems they’re always the ones that are picked on, for everything from globalisation to fat content,” he says. “People who are criticising McDonalds need to have a closer look at what they’re producing themselves. I think the recent outburst from Prince Charles when he was in the Middle East was interesting – I believe the Daily Mail picked up that his Cornish Pasties have higher fat and salt content than the McDonald’s products have. McDonald’s is unfairly picked on when it’s addressing the issues better than anyone else is at the moment.”
If there is a debate about the quality of the products sold in McDonald’s restaurants, the buck stops with Keystone. Through its quality inspection programme, the company ensures that McDonald’s arguably has the highest standards in the whole quick service industry. “When we deliver frozen, chilled and ambient products, they are inspected when they arrive into our distribution centres from the supplier, they’re inspected on a random basis when they’re inside the distribution centre and they are inspected when they are put on to one of our vehicles,” says Assal. “They are yet again inspected when they arrive at the restaurant. This inspection level varies within the sequence. Most importantly, the products are temperature probed when they are in the restaurant and the packaging is checked to ensure that no one has tampered with it. The delivery will not be signed for by the manager unless the products are within certain temperature and quality parameters.” Clearly, quality plays an integral part of Keystone’s operations. Checking products at each stage of the distribution chain ensures that it provides McDonald’s with total quality, consistency and value for money.
Keystone’s inspection also covers food safety. Needless to say, food safety is absolutely paramount for any restaurant, particularly one with such a high profile. “McDonald’s don’t want any complaints made on any food safety issues in any restaurants. We are clearly a major player in that food safety chain from the farm to the restaurant.”
Managing the supply chain
As McDonald's UK distributor, it is also Keystone’s responsibility to co-ordinate the requirements of hundreds of restaurants with McDonald's suppliers and the company’s team approach is committed to providing the perfect service and products every time.
“Managing the whole supply chain for McDonalds means we deal with them suppliers a matter of fact and commercial manner. Through a day-to-day process of managing forecasted volumes, passing those forecasts on and working with suppliers on reliability and quality, we don’t tend to get into the philosophical issues of McDonald’s activities,” Assal says. “We work along the detail of the supply chain ensuring the reliability and quality is there to pass on to delivery into the restaurants.”
To achieve this, Keystone increasingly utilises the latest technology to manage the supply chain. “As volumes have grown over the years, technology has become progressively more important. We use technology and software for forecasting and work closely with McDonald’s marketing and business intelligence to develop these forecasts. It’s important we know what their marketing plans are so we know what the peaks and troughs are over the course of the year. We then pass that information on to the various suppliers as we see fit, depending on the nature of marketing and which areas are likely to see demand,” explains Assal.
While technology plays a significant part in forecasting, Keystone’s relationship with its suppliers is managed in a very traditional way. “People are buying McDonald’s every day so the business is fairly consistent – it’s just a matter of managing the peaks and troughs as they come along to ensure reliability and to ensure there are no out of stocks. On average we carry about five days of inventory in our stores, and there’s roughly three to four days of inventory in each restaurant.”
All of this adds up to a massive, and challenging, logistical operation; up to one million cases are delivered each week to restaurants across the length and breadth of the U.K. including the Isle of Man and Channel Islands. “There are roughly 1200 McDonald’s restaurants throughout the country and we deliver to them on a delivery frequency of three times per week on average. In order to that we have around 300 vehicles, tractors and trailers. By far our biggest challenge is ensuring those vehicles arrive at the restaurants on time and they contain everything that has been ordered and that the quality of the products, frozen, chilled or dry, is 100 percent.”
Improving efficiency
Keystone manages the supply chain to ensure that there is always sufficient stock to fulfill demand when orders are received. The company’s integrated order and management system prints colour coded descriptive picking labels which aid restaurants in stock rotation. Orders are then collated on to a purpose built trailer designed for the simultaneous delivery of frozen, chilled and ambient product stored at appropriate temperatures. This ensures that the restaurants complete order is supplied in one delivery, whilst maintaining the product in perfect condition. This process works extremely well, but there is always room to improve processes. Keystone is working on an initiative that it hopes will further advance the efficiency of the company’s operations. “We’re reviewing the whole of the delivery schedule as well as the entire delivery system in conjunction with McDonald’s to try and find a more cost effective and equally eco-friendly delivery schedule with them,” says Assal. “That’s a major project for us at the moment and we’re working on that in detail. That will be rolled out in the coming months and it will produce a major cost benefit to the whole McDonald’s supply chain.”
It’s also important for Keystone’s environmental policy to chime with McDonald’s high profile efforts in this area. “All packaging within our distribution centres, both cardboard and plastics, is collected and recycled - we recycle everything from office stationery down to warehouse packaging. At present, we run all our vehicles on diesel that contains five percent bio-diesel. But we’re working on a project to use 100 percent bio-diesel in all our vehicles by the end of this year, instead of fossil fuel diesel. We believe that will have a neutral effect on the business; it will neither be a cost benefit or a cost saving.
We also have a number of initiatives light sensitive switches, low consumption bulbs in our warehouses. We try to play our part and do what we can to reduce our carbon footprint.” It’s policies like these that make Keystone a truly progressive company, and one that is moving with the times, just as McDonald’s updates its operations for a changing fast service industry.